TOP 10 POL­ICY INI­TIA­TIVES

De­mon­eti­sa­tion and Be­nami Act were the ma­jor ini­tia­tives

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - HT Es­tates Cor­re­spon­dent ht­es­tates@hin­dus­tan­times.com ■

The real es­tate sec­tor was in the news all through the year, with the govern­ment an­nounc­ing sev­eral ma­jor pol­icy ini­tia­tives such as the pas­sage of the Real Es­tate (Reg­u­la­tion and Development) Act 2016 and the amend­ment to the Be­nami Trans­ac­tions Act. But the most talked about was the de­mon­eti­sa­tion of ` 500 and

` 1000 cur­rency notes used mostly for real es­tate trans­ac­tions.

Some pol­icy ini­tia­tives listed by in­ter­na­tional prop­erty con­sul­tants Col­liers Re­search in­cluded the fol­low­ing 10 pol­icy ini­tia­tives. Real Es­tate (Reg­u­la­tion and Development) Act, 2016: The Real Es­tate (Reg­u­la­tion and Development) Act, 2016 which came into force in March 2016 has laid down a reg­u­la­tory frame­work which will change the way the real es­tate sec­tor op­er­ates in India. It aims to en­hance trans­parency, bring greater ac­count­abil­ity in the realty sec­tor and set dis­clo­sure norms to pro­tect the in­ter­est of all stake­hold­ers. Speedy ex­e­cu­tion of prop­erty dis­putes will also be en­sured in due course . Amend­ment to the Be­nami Trans­ac­tions Act: The Be­nami Trans­ac­tions (Pro­hi­bi­tion) Amend­ment Act, 2016 lays down strin­gent rules and penal­ties as­so­ci­ated with deal­ings re­lated to ‘be­nami’ trans­ac­tions. It es­tab­lishes a reg­u­la­tory mech­a­nism to deal with dis­putes arising from such trans­ac­tions and levy­ing penal­ties to in­crease the in­sti­tu­tion-in­vestor par­tic­i­pa­tion and reg­u­lat­ing the sec­tor to make India an at­trac­tive in­vest­ment des­ti­na­tion.

100% de­duc­tion in prof­its for af­ford­able hous­ing con­struc­tion: To pro­mote af­ford­able hous­ing, the fi­nance min­is­ter pro­posed 100% de­duc­tion in prof­its to an un­der­tak­ing from a hous­ing project for flats of up to 30 sq me­tre in four metro cities and 60 sq me­tre in other cities. These projects have to be ap­proved dur­ing June 2016 to March 2019. An­other con­di­tion

was that the project should be com­pleted within three years of grant of ap­proval. In­ter­est sub­sidy for first

time home­buy­ers: To stim­u­late hous­ing de­mand from first- time home buy­ers, the Union Bud­get 2016-17 also pro­posed de­duc­tion of ad­di­tional in­ter­est of ` 50,000 per an­num for first-time home buy­ers for loans of up to ` 35 lakh sanc­tioned dur­ing the next fi­nan­cial year for houses with a value not ex­ceed­ing ` 50 lakh. This move should pos­i­tively in­flu­ence home sales in non­met­ros in the long term where res­i­den­tial prod­uct prices are not as high as those in met­ros.

Change in ar­bi­tra­tion norms for con­struc­tion com­pa­nies: To help the ail­ing con­struc­tion sec­tor, the govern­ment has cleared re­forms in­clud­ing speed­ier res­o­lu­tion of dis­putes and the re­lease of 75% of amounts that are stuck in ar­bi­tra­tion. The govern­ment will now re­lease 75% of amounts against mar­gin-free guar­an­tee in cases where ar­bi­tral awards have been given but have been con­tested. The amount re­leased will be used by con­trac­tors to com­plete projects or pay off debts. This is aimed at im­prov­ing the cash flow po­si­tion of large de­vel­op­ers who have sig­nif­i­cant ex­po­sure in in­fra­struc­ture and govern­ment con­tracts and even­tu­ally help in speedy ex­e­cu­tion of large in­fra­struc­ture projects. Com­ing at a time when most de­vel­op­ers are strug­gling with liq­uid­ity is­sues, this is a boon from an over­all per­spec­tive..

Ser­vice tax ex­emp­tion on con­struc­tion of af­ford­able hous­ing: Ex­emp­tion of ser­vice tax on con­struc­tion of af­ford­able houses of up to 60 square me­tre un­der any scheme of the Cen­tral or state govern­ment in­clud­ing pub­lic pri­vate par­tic­i­pa­tion or PPP schemes will pro­pel con­struc­tion in af­ford­able seg­ment across India and en­cour­age greater col­lab­o­ra­tion be­tween the pub­lic and pri­vate sec­tor as well as par­tic­i­pa­tion in af­ford­able home con­struc­tion. DDT ex­emp­tion for SPVs to REITs: The Union Bud­get 2016-17 ex­empted any distri­bu­tion made out of the in­come of the Special Pur­pose Ve­hi­cles (SPVs) to the Real Es­tate In­vest­ment Trusts (REIT) and In­fra­struc­ture In­vest­ment Trusts (In­vIT) from the levy of Div­i­dend Distri­bu­tion Tax. This paved the way for the REIT model to be­come fi­nan­cially vi­able for re­tail in­vestors. Im­ple­men­ta­tion of Goods and Ser­vices Tax struc­ture: Goods and Ser­vices Tax (GST) is a pos­i­tive move to­wards sim­pli­fi­ca­tion of In­dian tax sys­tem. How­ever, the real es­tate in­dus­try is still await­ing clar­ity on which items fall into “sin” and “com­mon use” and whether they will at­tract 18%, or 12% pos­si­ble tax rates. Ad­di­tional clar­i­fi­ca­tion is also needed if the im­ple­men­ta­tion of GST will sub­sume ex­ist­ing ser­vice tax and Value Added Tax (VAT), which are levied for un­der con­struc­tion projects cur­rently. Cur­rency de­mon­eti­sa­tion of 500 and 1,000 ru­pee notes: The re­cent de­mon­eti­sa­tion of

` 500 and ` 1,000 ru­pee notes by the prime min­is­ter is per­ceived as a sig­nif­i­cant re­form. In the long run, this mea­sure along with Real Es­tate (Reg­u­la­tion and Development) Act, 2016 (RERA) will align the real es­tate sec­tor to the in­ter­na­tional stan­dards of do­ing business, re­sult­ing in more fund flow from in­sti­tu­tional in­vestors, banks and higher unit sales. Per ma­nent Res­i­dency Sta­tus for for­eign in­vestors: The Union Cabi­net ap­proved the grant of Per­ma­nent Res­i­dency Sta­tus (PRS) to for­eign in­vestors, sub­ject to var­i­ous con­di­tions and with a pro­vi­sion for re­newal for an­other 10 years. As PRS al­lows the hold­ers’ spouse/de­pen­dents to take up em­ploy­ment in India, as well as the pur­chase of one res­i­den­tial prop­erty for end-use, the end user pool, mainly for high-end and lux­ury seg­ment prod­ucts stands in­creased which can pro­mote the as­set class in a big way.

PARVEEN KU­MAR

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